UPDATE: Piper Jaffray Initiates Coverage On PennyMac Mortgage Investment Trust On Unique Mortgage Vehicle

In a report published Friday, Piper Jaffray analyst Jason S. Deleeuw initiated coverage on

with a Neutral rating and $23.00 price target. In the report, Piper Jaffray noted, “We are initiating on PMT with a Neutral rating and a $23 one-year price target, offering 7% upside potential from price appreciation and an 11.4% yield from dividends. PMT's shares have posted a 1% total return YTD vs. the S&P 500/mortgage banking peer group at +6%/+15%. PMT is a mortgage REIT that primarily holds distressed loans, MBS, mortgage servicing rights, and excess servicing. PMT also originates mortgage loans using the services of PennyMac Financial Services (PFSI). We find PMT's dividend yield attractive; however, we believe meaningful valuation expansion above book value will be limited given our expectation for less distressed loan portfolio gains. Our $23 price target is based on 1.05x our 2015E book value of $22.17.” PennyMac Mortgage Investment Trust closed on Thursday at $21.30.